6,7,8 - RP, RAP, LL-T Flashcards
Agents
Listing Broker - Sells the house
Selling Broker ('buyer") - subagent
Fiduciary duty to seller
But: CA - duty to buyer for diligent visual inspection
Buyer's Broker - you pay, represents you
Notes:
Conflict of interest - increase price, increase commission
Commission- due upon “ready willing and able buyer”
but: when contractual provision - must close; custom - must close
Real Estate Contract
“Executory” - title not transferred upon signing
Contingencies: title search, financing, inspection
Closing = deed transfer
Subjects to Statue of Frauds
Real Estate - Statute of Frauds
Contracts must be in writing
Need: Names, Land, Signature of Parties, sometimes Price (can be ‘market’)
Oral understanding ok if no objections
if objections - only if part performance or estoppel
Real Estate - Closing
Deed Transfer
Some states require physical presence
CA - 3rd party escrow
Lender provides proceeds of land to seller, seller pays off loans, brokers, legal fees and pockets remainder
*only happens if buyer does no rescind
Grounds for Rescission
Failure of contingency
False Statement (action)
Non-disclosure of material hidden defect (inaction)
Modern - if known and not discoverable
Old CL - buyer beware
Material Defects & Disclosure
Objective - important to reasonable person in decision
Subjective - affect value or desirability by actual buyer
Obvious Defect - no duty but still grounds for rescission (inspection clause)
“AS IS” effect - if discoverable defect no grounds for rescission, modern - must disclose hidden defects still; CA disclose even if as is (//verify this//)
Offsite Condition - CL = no disclosure; modern - disclose (CA - noise problems that affect $ must disclose)
**recognize material defect and recognize non-disclosure by buyer
Equitable Conversion
After signing and before closing:
Buyer = equitable owner; Seller holds title as trustee
B has Risk of Loss unless negligence by S or unmarketable title
B gets benefit of insurance that S holds as trustee
Remedy for breach = specific performance
Deed Types
Transfers at moment of closing
General Warranty
* seller owns, has right and is conveying in fee simple, free of encumbrances. buyer will enjoy quiet title and seller will defend buyer from all claims
Limited (Special) Warranty - (ADD TO THIS)
Quitclaim - whatever i have, i’m giving you. no promises
Marketable Title
free from reasonable doubt whether seller can convey
Defects to marketability:
* Record Chain - buying from seller w/o full interest
* Encumbrances - mortgage, easement, use restrictions
Merger Doctrine
When buyer accepts deed (at closing), the buyer is deemed to be satisfied that all contractual obligations have been met.
- Contract merged into deed and deed is final act
- Buyer can then only sue on warranty in deed
- Unless - contract is an independent or collateral obligation
Warranty of Habitability and Quality
Common Law - Buyer Beware
Uniform Land Transaction Statute:
*New Construction - warranty of skilled construction runs with land
*Used and New Houses - warranty of suitability
*Contractual Exception - not against live-in buyers
Remedy Options
Damages - benefit of bargain rule
Specific Performance - land is unique
Loss of Deposit - if buyer not able to close at agreed upon date
Title Assurance Recording Systems
Goal: provide prospective buyer means to verify earlier transaction in the property
Pure Race - SP wins if first to record
Pure Notice - SP wins if no actual or constructive notice
Race-Notice - SP wins if no notice & first to record
Notice: Actual, Record (except defective), Inquiry
Wild Deed Rule - deed outside of chain of title (i.e no notice)
Shelter Rule - protects SP who buys from a GFP
What to Record
Sale of Land, Life Estate, Mortgage, Restrictive Covenants, Tax Liens
NOT recordable: AP, Easement by necessity, short-term leases
Title Assurance
Title Examination by Lawyer
Title Insurance - covers matters not disclosed even in careful search & litigation cost.
Mortgage
Recorded in system (race, notice, race-notice)
Follows Land
Assume Mortgage = both liable but A primary
Subject to the Mortgage = A not liable but land taken if O defaults
Must be in writing
2 Docs: Note - promise to make payments and Mortgage - right to sell land for default
Mortgage Foreclosure
Until Foreclosure - debtor/mortgagor has title and right to possession.
Redemption in Equity - debtor can pay off missed payment and penalties up to foreclosure
(no clogging - can’t waive this right)
Statutory Redemption - can redeem for period after foreclosure
Rule Against Perpetuities Question
RAP - is when someone conveys an interest ask the question, “is there any possibility that it will vest more than 21 years after death of everyone alive at the creation”
We will either know or won’t know will vest within 21 years.
2 ways to execute
(1) positive test - if you find one person, you’re okay
(2) negative test - if you can’t find anyone, yes, void
Numerous Clausus
doctrine that says you can’t create new property interest/right
Why: property interest run with resource and future generations can be bound by it
(Court in equity can create “pre-possessory” interest in popov)
Life Estate
LE Holder - Right to possess during lifetime - current possessory interest (this is transferable during life)
- can be defeasible - house to bunny as long as my widow.
- Future Interest is to someone else
Damage by LE holder is called Waste
*Affirmative Waste - throwing pizza on
*Permissive Waste - neglect
*Ameliorative Waste - improve value (may not be compensated)
Duty of possessor to prevent waste, not to impair value, make reasonable repairs
TRUST FUND
H->TM->P
Hilton gives to Trust Manager
Trust Manager manages principle and gives Paris some of benefits
(Know TM has fiduciary duties to H and P to generate and pass on and keep trust healthy and functioning)
P is a life tenant of the trust. T is a separate entity
Rule of Convenience
RAP - class closed when A (life estate) dies
Lease or License
Language - often mixed; not accepted when to evade tenant protection Conditions (1) specific uses or general control (2) right to exclude owner? (3) defined area of land?
Mall Kiosks = license not lease, not exclusive
Billboards = license not lease
Hotel Guests = long period = tenant
Employment on premise (farmhand) = if occupancy depends only on employment less likely to get tenant. If pay, more likely
Dorms = depends - can be revocable license, Hastings chooses your room.
Tenant when: Strong possessory interest. Expectation of Exclusion
Possessory Estates: Types
- Term of Years - fixed period and duration
- Periodic - period specified, but undetermined duration
- At Will - no definite time horizon
- Tenancy at Sufferance
- Life Tenancy (aka Life Estate)
